Discussion:Mis-stated Depreciation and how to Re-capture
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| Revision as of 14:31, 3 February 2007 Truthseeker (Talk | contribs) (Dr Brisket- The) ← Previous diff |
Current revision DR BRISKET (Talk | contribs) (Section 179 appl) |
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| {{ForumReplyPost|UserID=Truthseeker|Date=3 February 2007|Text=Dr Brisket- The asset is a truck used 66% for business. They used actual expenses 'vs' standard mileage. No section 179 was taken. Does the Section 179 suggestion still apply? I don't suspect future use to drop under 50%. }} | {{ForumReplyPost|UserID=Truthseeker|Date=3 February 2007|Text=Dr Brisket- The asset is a truck used 66% for business. They used actual expenses 'vs' standard mileage. No section 179 was taken. Does the Section 179 suggestion still apply? I don't suspect future use to drop under 50%. }} | ||
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| + | {{ForumReplyPost|UserID=DR BRISKET|Date=3 February 2007|Text=Section 179 applies as long as the business usage exceeds 50%. Assuming the truck weighs over 6,000 lbs, Section 179 depreciation could be taken up to 66% of the truck's cost or basis. Keep in mind you can basically "pick and choose" Section 179 amounts up to the adjusted basis. Any remaining amount is then depreciated in future years via MACRS rules.}} | ||
Current revision
Discussion Forum Index --> Tax Questions --> Mis-stated Depreciation and how to Re-capture
Truthseeker (talk|edits) said: | 3 February 2007 |
| TP last year(2006)inadvertently took depreciation for same listed property under different asset names. This resulted in a overstated depreciation amount for asset on TP SchC. My question is how does one go about correcting the situation:
A) File an Amended return for tax year 2005, correcting the error(removing one of assets) B) Remove duplication asset from 2006, ADD the over-stated amount to the "Prior Depreciation Taken History", thus shorting future "to be taken" depreciation C) Close-out and Recapture the overstated asset depreciation amount on the 2006 return Any insight here would be greatly appreciated. | |
Bottom Line (talk|edits) said: | 3 February 2007 |
| I'd probably amend and pay the tax. | |
DR BRISKET (talk|edits) said: | 3 February 2007 |
| I would expect the IRS would want the 2005 return to be amended. Assuming there are no other corrections, this would result in a lower depreciation deduction and higher taxable income. Of course, this would generate additional SE tax as well as fed/state income taxes (plus penalties and interest). But, consider the following: Apparently, the TP did not claim a Section 179 deduction on either asset in 2005. If this is true, you could Section 179 the remaining asset up to the amount of the depreciation taken on the duplicate asset. This would result in no change on an amended return. The undepreciated value of the asset that gets carried forward to 2006 should produce the same amount of 2006 depreciation as your Option B. Accordingly, that is the approach I would choose. | |
| 3 February 2007 | |
| If preparer error, and the same firm is preparing the return this year, I think there is an obligation to amend. If a taxpayer error, there is an obligation to advise the client to amend. There is a small difference. | |
Truthseeker (talk|edits) said: | 3 February 2007 |
| Dr Brisket- The asset is a truck used 66% for business. They used actual expenses 'vs' standard mileage. No section 179 was taken. Does the Section 179 suggestion still apply? I don't suspect future use to drop under 50%. | |
DR BRISKET (talk|edits) said: | 3 February 2007 |
| Section 179 applies as long as the business usage exceeds 50%. Assuming the truck weighs over 6,000 lbs, Section 179 depreciation could be taken up to 66% of the truck's cost or basis. Keep in mind you can basically "pick and choose" Section 179 amounts up to the adjusted basis. Any remaining amount is then depreciated in future years via MACRS rules. | |
